UK prosecutor faces legal hurdle in Olympus case

Reuters Staff

3 Min Read

A man passes a logo of Olympus Corp outside the company's showroom in Tokyo December 21, 2012. Olympus and Sony Corp said on Friday that a planned merger of the two firms' medical business will take longer than expected due to delays in obtaining regulatory approval abroad. REUTERS/Yuriko Nakao (JAPAN - Tags: BUSINESS HEALTH) - RTR3BT97

LONDON (Reuters) - The UK anti-fraud agency seeking to prosecute Japan’s Olympus Corp for misleading an auditor needs first to clarify whether a company can commit certain offences under UK law, a London court heard on Tuesday.

Britain’s Serious Fraud Office (SFO) last week brought five charges against the endoscope-to-camera maker and Gyrus, its UK medical equipment subsidiary, which have battled to restore a reputation decimated by a $1.7 billion accounting scandal.

The SFO says the two companies made a misleading, false or deceptive statement to an auditor between April 2010 and March 2011 after a global fraud case for which Olympus and three of its top executives have already been prosecuted in Japan.

But a judge at Westminster Magistrates’ Court said on Tuesday that lawyers were likely to first present their case about whether this offence could be committed by a corporate under the UK Companies Act before Olympus enters a plea.

The scandal surrounding one of Japan’s most venerable companies burst into the limelight after British CEO Michael Woodford blew the whistle on a string of unexplained and hefty payments linked to at least four acquisitions around 2008.

Woodford, who rose through the ranks at Olympus over a 30 year career to become its first foreign CEO, was fired two weeks into the job in October 2011 after persistently warning about corruption at the top echelons of company.

As prosecutors around the world investigated, Olympus shares crashed and the board eventually resigned. Three former executives and the company itself pleaded guilty last September to charges related to a cover-up in Japan’s worst corporate scandal.

Former chairman Tsuyoshi Kikukawa, former executive vice-president Hisashi Mori and former auditor Hideo Yamada received suspended jail sentences and the company was fined 700 million yen ($7 million) by a Tokyo court in July.

The SFO is charging Olympus under Section 501 of the 2006 Companies Act, which is related to an auditor’s rights to information.

The next UK hearing has been scheduled at the higher Southwark Crown Court on September 24.